Essays on bank development, income inequality and human capital inequality

Abstract

The core of the thesis consists of three empirical papers. The first one is about the link between bank development, corruption and economic growth. The second and the third both talk about inequality and how it relates to economic development. But the concepts of inequality differ in the two papers. The second one focuses on income inequality, while the third one examines human capital inequality. Following an introductory chapter that presents the motivation and major findings of the thesis. Chapter 2 investigates how bank development and corruption interactively impact economic growth based on a panel data set on 110 countries for the period 1985-2009. As to the measurement of bank development, this paper looks beyond the traditional size measure of banking system from the literature, private credit to GDP, by including two other bank indicators to capture the depth and efficiency of bank development, which are normally ignored in the empirical analysis. Using one-step system GMM estimation, the results suggest that the size of banking system is negatively related to growth, while the depth and efficiency are both positively linked to growth. Corruption has no direct growth effect.